Managerial Accounting 2Nd Edition Hilton Solutions Manual Full Chapter PDF

Managerial Accounting 2nd Edition
Hilton Solutions Manual

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Chapter 07 - Cost-Volume-Profit Analysis, Absorption and Variable Costing
CHAPTER 7
Cost-Volume-Profit Analysis, Absorption and
Variable Costing
ANSWERS TO REVIEW QUESTIONS

7-1 a. In the contribution-margin approach, the break-even point in units is calculated
using the following formula:
fixed expenses
Break -even point =
unit contributi on margin
b. In the equation approach, the following profit equation is used:
 unit sales volume  unit variable sales volume fixed

   −    − =0
 salesprice in units   expense in units  expenses
This equation is solved for the sales volume in units.
c. In the graphical approach, sales revenue and total expenses are graphed. The
break-even point occurs at the intersection of the total revenue and total expense
lines.
7-2 The term unit contribution margin refers to the contribution that each unit of sales
makes toward covering fixed expenses and earning a profit. The unit contribution
margin is defined as the unit sales price minus the unit variable expense.
7-3 In addition to the break-even point, a CVP graph shows the impact on total expenses,
total revenue, and profit when sales volume changes. The graph shows the sales
volume required to earn a particular target net profit. The firm's profit and loss areas
are also indicated on a CVP graph.
7-4 The safety margin is the amount by which budgeted sales revenue exceeds break-
even sales revenue.
7-5 An increase in the fixed expenses of any enterprise will increase its break-even
point. In a travel agency, more clients must be served before the fixed expenses are
covered by the agency's service fees.
© 2013 McGraw-Hill Ryerson

Managerial Accounting, 2/e 7-1
Chapter 07 - Cost-Volume-Profit Analysis
7-6 A decrease in the variable expense per kilogram of oysters results in an increase in
the contribution margin per kilogram. This will reduce the company's break-even
sales volume.
7-7 The president is correct. A price increase results in a higher unit contribution
margin. An increase in the unit contribution margin causes the break-even point to
decline.
The financial vice president's reasoning is flawed. Even though the break-even
point will be lower, the price increase will not necessarily reduce the likelihood of a
loss. Customers will probably be less likely to buy the product at a higher price.
Thus, the firm may be less likely to meet the lower break-even point (at a high price)
than the higher break-even point (at a low price).
7-8 When the sales price and unit variable cost increase by the same amount, the unit
contribution margin remains unchanged. Therefore, the firm's break-even point
remains the same.
7-9 The fixed annual donation will offset some of the museum's fixed expenses. The
reduction in net fixed expenses will reduce the museum's break-even point.
7-10 A profit-volume graph shows the profit to be earned at each level of sales volume.
7-11 Operating managers frequently prefer the contribution income statement because it
separates fixed and variable costs. This format makes cost-volume-profit
relationships more readily discernible.
7-12 The gross margin is defined as sales revenue minus all variable and fixed
manufacturing expenses. The total contribution margin is defined as sales revenue
minus all variable expenses, including manufacturing, selling, and administrative
expenses.
7-13 Under absorption costing, fixed manufacturing-overhead costs are assigned to units
of product as product costs. Under variable costing, fixed manufacturing-overhead
costs are not assigned to units of product as product costs; rather they are treated
as period costs and expensed during the period in which they are incurred.
7-14 Timing is the key in distinguishing between absorption and variable costing. All
manufacturing costs will ultimately be expensed under either absorption costing or
variable costing. The difference between the two methods lies in the time period
during which fixed manufacturing-overhead costs are expensed. Under variable
costing, the fixed manufacturing-overhead costs are expensed during the period in
which they are incurred. Under absorption costing, fixed manufacturing-overhead
costs are held in inventory as product costs until the period during which the units
are sold. Then those costs flow into cost-of-goods-sold expense.
7-15 The term direct costing is a misnomer. Variable costing is a better term for this
product-costing method. Under variable costing, the variable costs of direct material,
direct labour, and variable overhead are treated as product costs. Fixed
manufacturing-overhead costs are not treated as product costs. Thus, the important
characteristic of a cost that determines whether it is treated as a product cost under
variable costing is its cost behavior. Direct costing is a misnomer because variable-
overhead costs are not direct costs, but they are treated as product costs under the
variable-costing method.
7-16 When inventory increases, the income reported under absorption costing will be
greater than the income reported under variable costing. This difference results from
the fact that under absorption costing, some of the fixed manufacturing costs
incurred during the period will not be expensed. In contrast, under variable costing
all of the fixed manufacturing costs incurred during the period will be expensed
during that period.
7-17 Under absorption costing, all manufacturing-overhead costs (including fixed costs)
are assigned to units of product as product costs. Under variable costing, fixed
manufacturing-overhead costs are not assigned to units of product as product
costs; rather they are treated as period costs and expensed during the period in
which they are incurred. Under throughput costing, only the unit-level spending for
direct costs is assigned as a product cost.
7-18 Some managerial accountants believe that absorption costing may provide an
incentive for managers to overproduce inventory so that the fixed manufacturing
overhead costs may be spread over a larger number of product units, thereby
lowering the reported product cost per unit. Throughput costing avoids this
potential problem by not assigning fixed manufacturing overhead as a product cost.
7-19 Variable and absorption costing will not result in significantly different income
measures in a JIT setting. Under JIT inventory and production management,
inventories are minimal and as a result inventory changes are also minimal. Variable
and absorption costing result in significantly different income measures only when
inventory changes significantly from period to period.
7-20 Many managers prefer absorption-costing data for cost-based pricing decisions.
They argue that fixed manufacturing overhead is a necessary cost of production. To
exclude this fixed cost from the inventoried cost of a product, as is done under
variable costing, is to understate the cost of the product. This, in turn, could lead to
setting cost-based prices too low.
7-21 Proponents of variable costing argue that a product’s variable cost provides a better
basis for the pricing decision. They point out that any price above a product’s
variable cost makes a positive contribution toward covering fixed cost and profit.
7-22 Variable costing is consistent with cost-volume-profit analysis because it properly

reflects the cost behavior of variable and fixed costs. Only variable manufacturing
costs are treated as inventoriable product costs. Fixed manufacturing costs are
recorded as a lump sum and expensed during the period incurred. CVP analysis also
properly maintains the cost-behavior distinction between variable and fixed costs. In
contrast, absorption costing is inconsistent with CVP analysis, because fixed
overhead is applied to manufactured goods as a product cost on a per-unit basis.
7-23 East Company, which is highly automated, will have a cost structure dominated by
fixed costs. West Company's cost structure will include a larger proportion of
variable costs than East Company's cost structure.
A firm's operating leverage factor, at a particular sales volume, is defined as its total
contribution margin divided by its net income. Since East Company has
proportionately higher fixed costs, it will have a proportionately higher total
contribution margin. Therefore, East Company's operating leverage factor will be
higher.
7-24 When sales volume increases, Company X will have a higher percentage increase in
profit than Company Y. Company X's higher proportion of fixed costs gives the firm
a higher operating leverage factor. The company's percentage increase in profit can
be found by multiplying the percentage increase in sales volume by the firm's
operating leverage factor.
7-25 The sales mix of a multiproduct organization is the relative proportion of sales of its
products.
The weighted-average unit contribution margin is the average of the unit contribution
margins for a firm's several products, with each product's contribution margin
weighted by the relative proportion of that product's sales.
7-26 Cost-volume-profit analysis shows the effect on profit of changes in expenses, sales
prices, and sales mix. A change in the hotel's room rate (price) will change the
hotel's unit contribution margin. This contribution-margin change will alter the
relationship between volume and profit.

7-27 The low-price company must have a larger sales volume than the high-price
company. By spreading its fixed expense across a larger sales volume, the low-price
firm can afford to charge a lower price and still earn the same profit as the high-price
company. Suppose, for example, that companies A and B have the following
expenses, sales prices, sales volumes, and profits.
Company A Company B
Sales revenue:
350 units at $10 .............................................. $3,500
100 units at $20 .............................................. $2,000
Variable expenses:
350 units at $6 ................................................ 2,100
100 units at $6 ................................................ 600
Contribution margin............................................. $1,400 $1,400
Fixed expenses .................................................... 1,000 1,000
Profit ..................................................................... $ 400 $ 400
7-28 The statement makes three assertions, but only two of them are true. Thus the
statement is false. A company with an advanced manufacturing environment
typically will have a larger proportion of fixed costs in its cost structure. This will
result in a higher break-even point and greater operating leverage. However, the
firm's higher break-even point will result in a reduced safety margin.
7-29 Activity-based costing (ABC) results in a richer description of an organization's cost

behavior and CVP relationships. Costs that are fixed with respect to sales volume
may not be fixed with respect to other important cost drivers. An ABC system
recognizes these nonvolume cost drivers, whereas a traditional costing system does
not.

SOLUTIONS TO EXERCISES
EXERCISE 7-30 (25 MINUTES)
Total Break-Even
Sales Variable Contribution Fixed Net Sales
Revenue Expenses Margin Expenses Income Revenue
1 $160,000a $40,000 $120,000 $30,000 $90,000 $40,000
2 80,000 65,000 15,000 15,000b -0- 80,000
3 120,000 40,000 80,000 30,000 50,000 45,000c
4 110,000 22,000 88,000 50,000 38,000 62,500d
Explanatory notes for selected items:
aBreak-even sales revenue............................................................................... $40,000

Fixed expenses ................................................................................................ 30,000
Variable expenses ........................................................................................... $10,000
Therefore, variable expenses are 25 percent of sales revenue.
When variable expenses amount to $40,000, sales revenue is $160,000.
b$80,000 is the break-even sales revenue, so fixed expenses must be equal to the
contribution margin of $15,000 and profit must be zero.
c$45,000 = $30,000  (2/3), where 2/3 is the contribution-margin ratio.
d$62,500 = $50,000/.80, where .80 is the contribution-margin ratio.
fixed expenses
1. Break-even point (in units) =
unit contribution margin
$40,000
= = 8,000 pizzas
$10 − $5

2. Contribution-margin ratio =
unit salesprice
$10− $5
= = .5
$10
EXERCISE 7-31 (CONTINUED)
fixed expenses
3. Break-even point (in sales dollars) =
contribution-marginratio
$40,000
= = $80,000
.5
4. Let X denote the sales volume of pizzas required to earn a target net profit of
$65,000.
Sales revenue - Variable expenses -Fixed expenses = Profit
$10X – $5X – $40,000= $65,000
$5X = $105,000
X = 21,000 pizzas
fixed costs
4,000,000p
= = 4,000 components
3,000p − 2,000p
p denotes Argentina’s peso
(4,000,000 p ) (1.10)
2. New break-even point (in units) =
3,000 p − 2,000 p
4,400,000 p
= = 4,400 components
1,000 p
3. Sales revenue (5,000  3,000p) ................................................. 15,000,000p

Variable costs (5,000  2,000p) ........................................................ 10,000,000p
Contribution margin ......................................................................... 5,000,000p
Fixed costs ........................................................................................ 4,000,000p
Net income ........................................................................................ 1,000,000p

4,000,000 p
4. New break-even point (in units) =
2,500 p − 2,000 p
= 8,000 components
5. Analysis of price change decision:

Price
3,000p 2,500p
Sales revenue: (5,000  3,000p) ................................ 15,000,000p
(6,200  2,500p) ................................ 15,500,000p
Variable costs: (5,000  2,000p) ................................ 10,000,000p
(6,200  2,000p) ................................ 12,400,000p
Contribution margin....................................................5,000,000p 3,100,000p
4,000,000p
Fixed expenses ........................................................... 4,000,000p
1,000,000p
Net income (loss) ........................................................ (900,000p)
The price cut should not be made, since projected net income will decline.

1. Cost-volume-profit graph:
Dollars per year

Total revenue
$300,000
Break-even point: Total expenses

$250,000 20,000 tickets Profit
area
Variable
$200,000 • expense
(at 30,000
tickets)
$150,000
Loss area
$100,000 Annual
fixed
expenses
$50,000
Tickets
sold per
5,000 10,000 15,000 20,000 25,000 30,000 year

2. Stadium capacity ................................................ 10,000

Attendance rate ...................................................  67%
Attendance per game ......................................... 6,700
Break -even point (tickets) 20,000

= =4
Attendance per game 5,000
The team must play 3 games to break even.

1. Profit-volume graph:
Dollars per year
$150,000
$100,000
$50,000
Break-even point: Profit
20,000 tickets area
0 • Tickets sold
5,000 10,000 15,000 20,000 25,000 per year
Loss
area
$(50,000)
$(100,000)
Annual fixed
expenses
$(150,000)
$(180,000)

2. Safety margin:
Budgeted sales revenue

(12 games  10,000 seats  .30 full  $10) ............................................. $360,000
Break-even sales revenue
(20,000 tickets  $10) ............................................................................... 200,000
Safety margin ................................................................................................. $160,000
3. Let P denote the break-even ticket price, assuming a 12-game season and 50 percent
attendance:
(12)(10,000)(.50)P – (12)(10,000)(.50)($1) – $180,000 = 0

60,000P = $240,000
P = $4 per ticket

1.
Sales Unit Unit
Bicycle Type Price Variable Cost Contribution Margin
High-quality $500 $300 ($275 + $25) $200
Medium-quality 300 150 ($135 + $15) 150
2. Sales mix:
High-quality bicycles ........................................................................................ 25%

Medium-quality bicycles ................................................................................... 75%
3. Weighted-average unit
contribution margin = ($200  25%) + ($150  75%)
= $162.50
fixed expenses
weighted-average unit contribution margin
$65,000
= = 400 bicycles
$162.50
Break-Even Sales
Bicycle Type Sales Volume Sales Price Revenue
High-quality bicycles 100 (400  .25) $500 $ 50,000
Medium-quality bicycles 300 (400  .75) 300 90,000
Total $140,000
5. Target net income:

$65,000+ $48,750
Sales volume requiredto earn target net income of $48,750=
$162.50
= 700 bicycles
This means that the shop will need to sell the following volume of each type of
bicycle to earn the target net income:
High-quality ........................................................................... 175 (700  .25)
Medium-quality ..................................................................... 525 (700  .75)

1. a. Inventory increases by 2,000 units, so income is greater under absorption

costing.
b. Fixed overhead $792 ,000

= = $7.20
rate per unit 110 ,000
Difference in
reported income = $7.20  2,000 = $14,400
2. a. Inventory decreases by 5,000 units, so income is greater under variable costing.
b. Fixed overhead $792 ,000

= = $8.80
rate per unit 90,000
Difference in
reported income = $8.80  5,000 = $44,000
3. a. Inventory remains unchanged, so there is no difference in reported income under

the two methods of product costing.
b. No difference

EXERCISE 7-37 (10 minutes)
Inventoriable costs under variable costing:
Direct material used ............................................................................... $290,000

Direct labour ...........................................................................................
100,000
Variable manufacturing overhead ........................................................
50,000
Total ........................................................................................................ $440,000
2. Inventoriable costs under absorption costing:

Direct labour ........................................................................................... 100,000
Variable manufacturing overhead ........................................................ 50,000
Fixed manufacturing overhead .............................................................
80,000
Total ........................................................................................................ $520,000
3. Inventoriable costs under throughput costing:
Direct material used* ............................................................................. $290,000

Total ........................................................................................................ $290,000
*Under this scenario, direct material cost is the only throughput cost.

Inventory calculations (units):
Finished-goods inventory, January 1 ................................................... 2,000 units

Add: Units produced ............................................................................. 20,000 units
Less: Units sold ..................................................................................... 21,000 units
Finished-goods inventory, December 31 ............................................. 1,000 units
1. Variable costing:
Direct material used ............................................................................... $ 600,000

Direct labour incurred ........................................................................... 300,000
Total ........................................................................................................ $1,100,000
Cost per unit produced = $1,100,000/20,000 units = $55 per unit
Ending inventory: 1,000 units  $55 per unit ................................... $55,000
2. Absorption costing:
Predetermined fixed-overhead rate
fixed manufacturing overhead $420,000

= =
planned production 20,000 units
= $21 per unit

Difference in fixed  change in   predetermined 

overhead expensed under    
=  inventory   fixed-overhead
absorption and variable costing  in units   
   rate 
= (1,000 units)  ($21 per unit)
= $21,000
Difference in reported income:
Since inventory decreased during the year, income reported under absorption
costing will be $21,000 lower than income reported under variable costing.
Inventory calculations (units):
Finished-goods inventory, January 1 ................................................... 0 units

Add: Units produced ............................................................................. 10,000 units
Less: Units sold ..................................................................................... 9,000 units
Finished-goods inventory, December 31 ............................................. 1,000 units
1. Variable costing:

Direct labour incurred ........................................................................... 20,000
Total ........................................................................................................ $72,000
Cost per unit produced = $72,000/10,000 units = $7.20 per unit
Ending inventory: 1,000 units  $7.20 per unit ................................ $7,200

2. Absorption costing:
Predetermined fixed-overhead rate

fixed manufacturing overhead $25,000
= = = $2.50 per unit
planned production 10,000 units
Difference in fixed  change in   predetermined 

overhead expensed under    
=  inventory   fixed-overhead
absorption and variable costing  in units   
   rate 
= (1,000 units)  ($2.50 per unit)
= $2,500
Difference in reported income:
Since inventory increased during the year, income reported under absorption
costing will be $2,500 higher than income reported under variable costing.
3. Throughput costing:
Inventoriable costs under throughput costing:

Total ........................................................................................................ $40,000
Cost per unit produced = $40,000/10,000 units = $4.00 per unit
Ending inventory: 1,000 units  $4.00 per unit ................................ $4,000

1. a. Inventory decreases by 3,000 units, so income is greater under variable costing.
b. Fixed overhead $2,200 ,000

= = $110
Difference in
= $110  3,000 = $330,000
reported income
2. a. Inventory remains unchanged, so there is no difference in reported income under

the two methods of product costing.
b. No difference.
3. a. Inventory increases by 2,000 units, so income is greater under absorption

costing.
b. Fixed overhead $2,200 ,000

= = $200
Difference in
= $200  2,000 = $400,000
reportedincome

1. Cost-volume profit graph:
Dollars (in millions)
$5
•
Break-even point:
Total cost 14,667 units
$4
(rounded)
Revenue
$3
$2
Fixed cost
$1 ($2,200,000)
Units (in
5 10 15 thousands)

2. Calculation of break-even point:
fixed cost
Break-even point =
$2,200,000
=
$350 − $200
= 14,667 units (rounded)
3. Variable costing is more compatible with the cost-volume-profit chart, because it

maintains the distinction between fixed and variable costs as does CVP analysis.
Absorption costing, in contrast, does not maintain the separation of fixed and
variable costs. Fixed costs are unitized in the fixed overhead rate and inventoried as
product costs along with variable manufacturing costs.
The specifics of the answer will vary, depending on the company and product selected.
However, the relative merits of absorption, variable and throughput costing as the basis for
pricing decisions are generally the same, regardless of the company and product.
Many managers prefer absorption-costing data for cost-based pricing decisions. They argue
that fixed manufacturing overhead is a necessary cost of production. To exclude this fixed
cost from the inventoried cost of a product, as is done under variable costing, is to
understate the cost of the product. This, in turn, could lead to setting cost-based prices too
low.
Proponents of variable costing argue that a product’s variable cost provides a better basis
for the pricing decision. They point out that any price above a product’s variable cost
makes a positive contribution toward covering fixed cost and profit.
Proponents of throughput costing take the variable-costing argument a step further and
argue that a product’s throughput cost provides the best basis for a cost-based pricing
decision. They argue that any price above a product’s unit-level spending for direct costs
(e.g., throughput costs) makes a positive contribution toward covering fixed cost and profit.

1. The following income statement, often called a common-size income statement,

provides a convenient way to show the cost structure.
Amount Percent
Revenue .............................................................. $500,000 100
Variable expenses .............................................. 300,000 60
Contribution margin........................................... $200,000 40
Fixed expenses .................................................. 150,000 30
Net income.......................................................... $ 50,000 10
2.
Decrease in Contribution Margin Decrease in
Revenue Percentage Net Income
$75,000*  40%† = $30,000
*$75,000 = $500,000  15%

†40% = $200,000/$500,000
contribution margin
3. Operatingleverage factor (at revenueof $500,000)=
net income
$200,000
= =4
$50,000
 percentageincrease  operatingleverage
4. Percentagechangein net income =   
 in revenue   factor 
   
= 20%  4
= 80%

SOLUTIONS TO PROBLEMS
PROBLEM 7-44 (30 MINUTES)
1. Break-even point in units, using the equation approach:
$16X – ($10 + $2)X – $600,000 = 0

$4X = $600,000
$600,000
X =
$4
= 150,000 DVDs
2. New projected sales volume = 200,000  110%

= 220,000 units
Net income = (220,000)($16 – $12) – $600,000
= (220,000)($4) – $600,000
= $880,000 – $600,000 = $280,000
3. Target net income = $200,000 (from original problem data)
New disk purchase price = $10  130% = $13
Volume of sales dollars required:
fixed expenses+ target net profit

Volume of sales dollars required =
$600,000+ $200,000 $800,000
= =
$16 − $13 − $2 .0625
$16
= $12,800,000

PROBLEM 7-44 (CONTINUED)
4. Let P denote the selling price that will yield the same contribution-margin ratio:
$16 − $10 − $2 P − $13 − $2
=
$16 P
P − $15
.25 =
P
.25P = P − $15
$15 = .75P
P = $15/.75
P = $20
Check: New contribution-margin ratio is:
$20 − $15
= .25
$20
5. In the electronic version of the solutions manual, press the CTRL key and click on the
following link: Build a Spreadsheet 07-44.xls
1. Break-even point in sales dollars, using the contribution-margin ratio:
fixed expenses
Break-evenpoint =
$180,000+ $72,000 $252,000
= =
$20 − $8 − $4 .4
$20
= $630,000

2. Target net income, using contribution-margin approach:

fixed expenses+ target net income
Sales units requiredto earnincome of $180,000=
$252,000+ $180,000 $432,000
= =
$20 − $8 − $4 $8
= 54,000units
3. New unit variable manufacturing cost = $8  110%

= $8.80
Break-even point in sales dollars:
$252,000 $252,000
Break - evenpoint = =
$20.00 − $8.80 − $4.00 .36
$20
= $700,000
4. Let P denote the selling price that will yield the same contribution-margin ratio:
$20.00 − $8.00 − $4.00 P − $8.80 − $4.00

=
$20.00 P
P − $12.80
.4 =
P
.4P = P − $12.80
$12.80 = .6P
P = $12.80/.6
P = $21.33 (rounded)
Check: New contribution-margin ratio is:

$21.33 − $8.80 − $4.00
= .4 (rounded)
$21.33

1. Unit contribution margin:

Sales price………………………………… $64.00
Less variable costs:
Sales commissions ($64 x 5%)…… $ 3.20
System variable costs……………… 16.00 19.20
Unit contribution margin……………….. $44.80
Break-even point = fixed costs ÷ unit contribution margin

= $985,000 ÷ $44.80
= 21,987 units
2. Model no. 4399 is more profitable when sales and production average 46,000 units.
Model Model
No. 6754 No. 4399
Sales revenue (46,000 units x $64.00)……... $2,944,000 $2,944,000

Sales commissions ($2,944,000 x 5%)… $ 147,200 $ 147,200
System variable costs:……………………
46,000 units x $16.00…………………. 736,000
46,000 units x $12.80…………………. 588,800
Total variable costs……………………….. $ 883,200 $ 736,000

Contribution margin…………………………... $2,060,800 $2,208,000
Less: Annual fixed costs…………………….. 985,000 1,113,600
Net income……………………………………… $1,075,800 $1,094,400
3. Annual fixed costs will increase by $90,000 ($450,000 ÷ 5 years) because of straight-
line depreciation associated with the new equipment, to $1,203,600 ($1,113,600 +
$90,000). The unit contribution margin is $48 ($2,208,000 ÷ 46,000 units). Thus:
Required sales = (fixed costs + target net profit) ÷ unit contribution margin
= ($1,203,600 + $956,400) ÷ $48
= 45,000 units
4. Let X = volume level at which annual total costs are equal

$16.00X + $985,000 = $12.80X + $1,113,600
$3.20X = $128,600
X = 40,188 units

1. Current income:
Sales revenue………………………... $3,360,000

Less: Variable costs………………… $ 840,000
Fixed costs……………………. 2,280,000 3,120,000
Net income……………………………. $ 240,000
Advanced Electronics has a unit contribution margin of $60 [($3,360,000 - $840,000)

÷ 42,000 sets] and desires to increase income to $480,000 ($240,000 x 2). In addition,
the current selling price is $80 ($3,360,000 ÷ 42,000 sets). Thus:
Required sales = (fixed costs + target net profit) ÷ unit contribution margin
= ($2,280,000 + $480,000) ÷ $60
= 46,000 sets, or $3,680,000 (46,000 sets x $80)
2. If operations are shifted to Mexico, the new unit contribution margin will be $62 ($80 -
$18). Thus:
Break-even point = fixed costs ÷ unit contribution margin

= $1,984,000 ÷ $62
= 32,000 sets
3. (a) Advanced Electronics desires to have a 32,000-unit break-even point with a

$60 unit contribution margin. Fixed cost must therefore drop by $360,000
($2,280,000 - $1,920,000), as follows:
Let X = fixed costs

X ÷ $60 = 32,000 units
X = $1,920,000
(b) As the following calculations show, Advanced Electronics will have to

generate a contribution margin of $71.25 to produce a 32,000-unit break-even
point. Based on an $80.00 selling price, this means that the company can
incur variable costs of only $8.75 per unit. Given the current variable cost of
$20.00 ($80.00 - $60.00), a decrease of $11.25 per unit ($20.00 - $8.75) is
needed.
Let X = unit contribution margin

$2,280,000 ÷ X = 32,000 units
X = $71.25

PROBLEM 7-47 (CONTINUED
4. (a) Increase
(b) Increase
(c) Increase
(d) No effect
1. Sales mix refers to the relative proportion of each product sold when a company
sells more than one product.
2. (a) Yes. Plan A sales are expected to total 65,000 units (45,500 + 19,500), which
compares favourably against current sales of 60,000 units.
(b) Yes. Sales personnel earn a commission based on gross dollar sales. As the
following figures show, Deluxe sales will comprise a greater proportion of
total sales under Plan A. This is not surprising in light of the fact that Deluxe
has a higher selling price than Basic ($86 vs. $74).
Current Plan A
Sales Sales
Units Mix Units Mix
Deluxe……... 39,000 65% 45,500 70%

Basic………. 21,000 35% 19,500 30%
Total 60,000 100% 65,000 100%
(c) Yes. Commissions will total $535,600 ($5,356,000 x 10%), which compares
favourably against the current flat salaries of $400,000.
Deluxe sales: 45,500 units x $86… $3,913,000

Basic sales: 19,500 units x $74….. 1,443,000
Total………………………………. $5,356,000

(d) No. The company would be less profitable under the new plan.
Current Plan A
Sales revenue:
Deluxe: 39,000 units x $86; 45,500 units x $86… $3,354,000 $3,913,000
Basic: 21,000 units x $74; 19,500 units x $74….. 1,554,000 1,443,000
Total revenue……………………………………. $4,908,000 $5,356,000
Less variable cost:
Basic: 21,000 units x $41; 19,500 units x $41….. 861,000 799,500
Sales commissions (10% of sales revenue)……. 535,600
Total variable cost……………………………… $3,396,000 $4,292,600
Contribution margin…………………………………….. $1,512,000 $1,063,400
Less fixed cost (salaries)………………………………. 400,000 ----
Net income………………………………………………... $1,112,000 $1,063,400
3. (a) The total units sold under both plans are the same; however, the sales mix
has shifted under Plan B in favour of the more profitable product as judged
by the contribution margin. Deluxe has a contribution margin of $21 ($86 -
$65), and Basic has a contribution margin of $33 ($74 - $41).
Plan A Plan B
Sales Sales
Units Mix Units Mix
Deluxe……... 45,500 70% 26,000 40%

Basic………. 19,500 30% 39,000 60%
Total…… 65,000 100% 65,000 100%
(b) Plan B is more attractive both to the sales force and to the company.
Salespeople earn more money under this arrangement ($549,900 vs. $400,000)
and the company is more profitable ($1,283,100 vs. $1,112,000).
Current Plan B
Sales revenue:
Basic: 21,000 units x $74; 39,000 units x $74….. 1,554,000 2,886,000
Total revenue……………………………………. $4,908,000 $5,122,000
Less variable cost:

Basic: 21,000 units x $41; 39,000 units x $41….. 861,000 1,599,000
Total variable cost……………………………… $3,396,000 $3,289,000
Contribution margin…………………………………….. $1,512,000 $1,833,000
Less: Sales force compensation:
Flat salaries…………………………………………... 400,000
Commissions ($1,833,000 x 30%)………………… 549,900
Net income ……………………………………………….. $1,112,000 $1,283,100
1. Plan A break-even point = fixed costs ÷ unit contribution margin

= $22,000 ÷ $22*
= 1,000 valves
Plan B break-even point = fixed costs ÷ unit contribution margin

= $66,000 ÷ $30**
= 2,200 valves
* $80 - [($80 x 10%) + $50]

** $80 - $50
2. Operating leverage refers to the use of fixed costs in an organization’s overall cost
structure. An organization that has a relatively high proportion of fixed costs and
low proportion of variable costs has a high degree of operating leverage.
3. Calculation of contribution margin and profit at 6,000 units of sales:
Plan A Plan B
Sales revenue: 6,000 units x $80………………. $480,000 $480,000

Cost of purchasing product:
6,000 units x $50…………………….…… $300,000 $300,000
Sales commissions: $480,000 x 10%……... 48,000 ----
Total variable cost……………………….. $348,000 $300,000
Contribution margin……………………………… $132,000 $180,000
Fixed costs…………………………………………. 22,000 66,000
Net income…………………………………………. $110,000 $114,000

Operating leverage factor = contribution margin ÷ net income

Plan A: $132,000 ÷ $110,000 = 1.2
Plan B: $180,000 ÷ $114,000 = 1.58 (rounded)
Plan B has the higher operating leverage factor.
4 & 5. Calculation of profit at 5,000 units:

Plan A Plan B
Sales revenue: 5,000 units x $80………………. $400,000 $400,000

Cost of purchasing product:
5,000 units x $50………………………….. $250,000 $250,000
Sales commissions: $400,000 x 10%……... 40,000 ----
Total variable cost……………………….. $290,000 $250,000
Contribution margin……………………………… $110,000 $150,000
Fixed costs………………………………………… 22,000 66,000
Net income…………………………………………. $ 88,000 $ 84,000
Plan A profitability decrease:

$110,000 - $88,000 = $22,000; $22,000 ÷ $110,000 = 20%
Plan B profitability decrease:

$114,000 - $84,000 = $30,000; $30,000 ÷ $114,000 = 26.3% (rounded)
Consolidated would experience a larger percentage decrease in income if it adopts

Plan B. This situation arises because Plan B has a higher degree of operating
leverage. Stated differently, Plan B’s cost structure produces a greater percentage
decline in profitability from the drop-off in sales revenue.
Note: The percentage decreases in profitability can be computed by multiplying the

percentage decrease in sales revenue by the operating leverage factor. Sales
dropped from 6,000 units to 5,000 units, or 16.67%. Thus:
Plan A: 16.67% x 1.2 = 20.0%

Plan B: 16.67% x 1.58 = 26.3% (rounded)
6. Heavily automated manufacturers have sizable investments in plant and equipment,

along with a high percentage of fixed costs in their cost structures. As a result,
there is a high degree of operating leverage.

In a severe economic downturn, these firms typically suffer a significant

decrease in profitability. Such firms would be a more risky investment when
compared with firms that have a low degree of operating leverage. Of course, when
times are good, increases in sales would tend to have a very favourable effect on
earnings in a company with high operating leverage.

fixed costs
1. Break-evenpoint (in units) =
$468,000
= = 90,000units
$25.00 − $19.80
fixed cost
2. Break-evenpoint (in sales dollars) =
$468,000
= = $2,250,000
$25.00 − $19.80
$25.00
fixed costs + target net profit

3. Number of sales units required to =
earn target net profit unit contribution margin
$468,000+ $260,000
= = 140,000units
$25.00 − $19.80
4. Margin of safety = budgeted sales revenue – break-even sales revenue

= (120,000)($25) – $2,250,000 = $750,000
5. Break-even point if direct-labour costs increase by 8 percent:
New unit contribution margin = $25.00 – $10.50 – ($5.00)(1.08) – $3.00 – $1.30

= $4.80
fixed costs
Break-even point =
new unit contribution margin
$468,000
= = 97,500units
$4.80
unit contributi on margin

6. Contribution margin ratio =
sales price
$25.00 − $19.80
Old contribution-margin ratio =
$25.00
= .208
Let P denote sales price required to maintain a contribution-margin ratio of .208. Then
P is determined as follows:
P − $10.50 − ($5.00)(1.08) − $3.00 − $1.30
= .208
P
P − $20.20 = .208P
.792P = $20.20
P = $25.51(rounded)
Check: New contribution- $25.51− $10.50 − ($5.00)(1.08) − $3.00 − $1.30
=
margin ratio $25.51
= .208 (rounded)
Calculation of predetermined fixed overhead rate:
budgetedfixed overhead
Predetermined fixed overhead rate =
budgetedproduction
$300 ,000
= = $2 per unit
150 ,000

Cost per Unit

1. Direct material ........................................................................................ $ 5
Direct labour ........................................................................................... 2
Variable overhead .................................................................................. 3
a. Cost per unit under variable costing ............................................. $10
Fixed overhead per unit under absorption costing ($300,000 ÷ 150,000 L)
2
b. Cost per unit under absorption costing ........................................ $12
2. a. SKINNY DIPPERS, INC.

ABSORPTION-COSTING INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 20X1
Sales revenue (125,000 units sold at $15 per unit) ........................ $1,875,000
Less: Cost of goods sold (at
absorption cost of $12 per unit) ................................................... 1,500,000
Gross margin ................................................................................... $ 375,000
Less: Selling and administrative expenses:
Variable (at $1 per unit) ....................................................... 125,000
Fixed ..................................................................................... 50,000
Net income ....................................................................................... $ 200,000

b. SKINNY DIPPERS, INC.

VARIABLE-COSTING INCOME STATEMENT
Sales revenue (125,000 units sold at $15 per unit) ........................ $1,875,000
Less: Variable expenses:
Variable manufacturing costs
(at variable cost of $10 per unit) ....................................... 1,250,000
Variable selling and administrative costs
(at $1 per unit) .................................................................... 125,000
Contribution margin ........................................................................ $ 500,000
Less: Fixed expenses:
Fixed manufacturing overhead ........................................... 300,000
Fixed selling and administrative expenses ....................... 50,000
Net income ....................................................................................... $ 150,000
3. Cost of goods sold under absorption costing ..................................... $1,500,000

Less: Variable manufacturing costs under variable costing ............ 1,250,000
Subtotal .................................................................................................. $ 250,000
Less: Fixed manufacturing overhead as period expense
under variable costing ............................................................... 300,000
Total ........................................................................................................ $ (50,000)
Net income under variable costing ...................................................... $ 150,000

Less: Net income under absorption costing ...................................... 200,000
Difference in net income ....................................................................... $ (50,000)
4. Difference in difference in fixed overhead expensed under

=
reported income absorption and variable costing
 changein inventory,  predetermined fixed 

=     
 in units   overheadrate per unit 
= (25,000 units)  ($2 per unit)
= $50,000
As shown in requirement (2), reported income is $50,000 lower under variable
costing.

5. In the electronic version of the solutions manual, press the CTRL key and click on
the following link: Build a Spreadsheet 07-51.XLS
1. Skinny Dippers produced 150,000 units (i.e., containers) and sold 125,000, which
leaves an ending finished-goods inventory of 25,000 units. Because only direct
material qualifies as a throughput cost, the cost of the ending inventory is $125,000
(25,000 containers x $5).
2.
SKINNY DIPPERS, INC.
THROUGHPUT-COSTING INCOME STATEMENT
Sales revenue (125,000 units x $15) ………………………………….. $1,875,000

Less: Cost of goods sold (125,000 units x $5)……………………… 625,000
Gross margin……………………………………………………………… $1,250,000
Less: Operating costs:
Direct labour (150,000 units x $2)…………………………………… $ 300,000
Variable manufacturing overhead (150,000 units x $3)……….. 450,000
Fixed manufacturing overhead……………………………………. 300,000
(125,000 units x $1)……………………………………………… 125,000
Fixed selling and administrative costs…………………………... 50,000
Total operating costs…………………………………………… $1,225,000
Net income………………………………………………………………… $ 25,000
3. Gross margin is computed by subtracting cost of goods sold from sales revenue.
The “cost” of a unit differs and depends on whether a firm uses absorption costing
or throughput costing. With absorption costing, the product cost consists of four
elements: direct material, direct labour, variable manufacturing overhead, and fixed
manufacturing overhead. Throughput costing, on the other hand, assigns only the
unit-level spending for direct costs (in this case, direct material) as the cost of a
product.
4. In the electronic version of the solutions manual, press the CTRL key and click on
the following link: Build a Spreadsheet 07-52.XLS

1. Since the planned production volume was 100,000 units, actual production was also
100,000 units.
Beginning inventory .............................................................................. 0 units

Production .............................................................................................. 100,000 units
Ending inventory .................................................................................... (20,000) units
Sales ....................................................................................................... 80,000 units
Since inventory increased during the year, reported income is higher under
absorption costing.
Difference in change in fixed overhead
reported income = 
inventory per unit
fixed overhead
$20,000 = 20,000 units 
100,000 units
Solving this equation: fixed overhead = $100,000
Now we can compute the contribution margin:

Reported income under variable costing ............................................. $220,000
Fixed overhead ...................................................................................... 100,000
Total contribution margin ..................................................................... $320,000
Contribution margin total contribution margin

per unit =
sales in units
$320,000
= = $4 per unit
80,000 units
Break-even point fixed cost (overhead)

in units =
$100,000
= = 25,000 units
$4 per unit


2. Profit-volume graph:
Dollars
$250,000
Profit = $220,000 at
80,000 unit sales volume
$200,000
$150,000
$100,000
$50,000 Break-even
point 25,000 units
Profit
0 Sales in units
Loss 25,000 50,000 75, 000 100,000
$(50,000)
$(100,000)
$(150,000)

1. Outback Corporation’s reported 20x1 income will be higher under absorption costing
because actual production exceeded actual sales. Therefore, inventory increased and some
fixed costs will remain in inventory under absorption costing which would be expensed
under variable costing.

a. Beginning inventory (in units) .............................................................. 35,000

Actual production (in units) .................................................................. 130,000
Available for sale (in units) ................................................................... 165,000
Sales (in units) .......................................................................................
125,000
Ending inventory (in units) ....................................................................
40,000
Budgeted manufacturing costs:
Direct material ........................................................................................ $1,680,000

Direct labour ........................................................................................... 1,260,000
Fixed manufacturing overhead ............................................................. 700,000
Total .................................................................................................... $4,200,000
Total budgetedmanufacturing costs (variable and fixed) $4,200 ,000

=
Total plannedproduction(in units) 140 ,000
= $30 per unit
Value of ending inventory = quantity  cost per unit
= 40,000 units  $30 per unit
= $1,200,000
b. Budgeted variable manufacturing costs:
Direct material ........................................................................................ $1,680,000

Direct labour ........................................................................................... 1,260,000
Total ........................................................................................................ $3,500,000
Total budgeted variablemanufacturing costs $3,500 ,000

=
Total plannedproduction(in units) 140 ,000
= $25 per unit

Value of ending inventory = quantity  cost per unit
= 40,000 units  $25 per unit
= $1,000,000
c. Increase in inventory (in units) = production – sales
= 130,000 units – 125,000 units
= 5,000 units
$700 ,000
Budgeted fixed manufacturing overhead per unit =
140 ,000 units
= $5 per unit
Difference in reported income
= budgeted fixed overhead per unit  change in inventory (in units)
= $5  5,000 units = $25,000
Income reported under absorption costing will be higher than that reported under
variable costing, because inventory increased during the year.
2. If Outback Corporation had adopted a JIT program at the beginning of 20x1:
a. It is unlikely that the company would have manufactured 5,000 more units than it
sold. Under JIT, production and sales would be nearly equal.
b. Reported income under variable and absorption costing would most likely be
nearly the same. Differences in reported income are caused by changes in
inventory levels. Under JIT, inventory levels would be minimal. Therefore, the
change in these levels would be minimal.

1. Cost per unit:

(a) Absorption Costing (b) Variable Costing
Direct material ............................. $20 ....................................................... $20

Direct labour ................................ 11 ....................................................... 11
Manufacturing overhead
Variable .................................... 8 ....................................................... 8
Fixed ($200,000 ÷ 25,000) ....... 8
Total absorption cost per unit….. $47
Total variable cost per unit ...............................................................................$39
2. a. GREAT OUTDOZE, INC.

INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 20X1
ABSORPTION COSTING
Sales revenue (at $65 per unit) ....................................................... $1,430,000

Less: Cost of goods sold (at
absorption cost of $47 per unit) ................................................... 1,034,000
Gross margin ................................................................................... $ 396,000
Less: Selling and administrative expenses:
Variable (at $1 per unit) ....................................................... 22,000
Fixed ..................................................................................... 30,000
Net income ....................................................................................... $ 344,000

b. GREAT OUTDOZE, INC.

VARIABLE COSTING
Sales revenue (at $65 per unit) ....................................................... $1,430,000

Less: Variable expenses:
Variable manufacturing costs
(at variable cost of $39 per unit) ....................................... 858,000
(at $1 per unit) .................................................................... 22,000
Contribution margin ........................................................................ $ 550,000
Less: Fixed expenses:
Fixed selling and administrative costs .............................. 30,000
Net income ....................................................................................... $ 320,000
3. Change in predetermined absorption-costing income

inventory  fixed overhead = minus variable-costing
(in units) rate income
3,000 unit increase  $8 = $24,000
4. If Great Outdoze had implemented JIT and installed a flexible manufacturing system
at the beginning of 20x1, it is unlikely that reported income would have differed by as
great a magnitude. Under this scenario, production and sales would have been
nearly the same. As a result, reported income under variable and absorption costing
would have been nearly equal. Differences in reported income are caused by
significant changes in inventory levels, which do not occur under JIT because
inventory is minimal.

1. Throughput cost per unit:
Direct material cost per unit* ...... $20

Total throughput
cost per unit ............................ $20
*Direct material is the only

throughput cost.
2. GREAT OUTDOZE, INC.

THROUGHPUT COSTING
Sales revenue (22,000 units at $65 per unit) .................................. $1,430,000

Less: Cost of goods sold (at throughput cost, the
direct-material cost, 22,000 x $20 per unit) 440,000
Gross margin ................................................................................... $ 990,000
Less: Operating costs:
Direct laboura 275,000
Variable overheadb 200,000
(at $1 per unit)c ................................................................ 22,000
Fixed selling and administrative costs ..............................
30,000
Net income ....................................................................................... $ 263,000
aSince the company manufactured more units than planned in the

budget, we must assume that management has committed to direct
labour sufficient to produce the actual production volume of 25,000
units; direct labour is used at the rate of $11 per unit produced.
bSince the company manufactured more units than planned in the

budget, we must assume that management has committed to
support resources sufficient to produce the actual production
volume of 25,000 units; variable-overhead cost is used at the rate of
$8 per unit produced.
cVariable selling and administrative costs amount to $1 per unit sold.

3. For throughput costing: Some managerial accountants believe that absorption

costing may provide an incentive for managers to overproduce inventory so that the
fixed manufacturing overhead costs may be spread over a larger number of product
units, thereby lowering the reported product cost per unit. Throughput costing
avoids this potential problem by not assigning fixed manufacturing overhead as a
product cost.
Against throughput costing: Many managers prefer absorption-costing data for

cost-based pricing decisions. They argue that fixed manufacturing overhead is a
necessary cost of production. To exclude this fixed cost from the inventoried cost of
a product, as is done under throughput (and variable) costing, is to understate the
cost of the product. This, in turn, could lead to setting cost-based prices too low.
1. Reported income will be lower under variable costing, because inventory is expected
to increase by 1,000 units during the year. (Twenty thousand units will be produced
in the last two months, but 19,000 units will be sold.)
2. a. Variable costing: Total contribution during first 10 months is equal to the fixed
costs plus profit for that period.
Fixed costs during first 10 months ...................................................... $2,000,000

Profit during first 10 months ................................................................ 200,000
Total contribution margin ..................................................................... $2,200,000
$2,200 ,000
Contribution margin per unit = = $22 per unit
100 ,000
Projected total sales for the year are 119,000 units (100,000 in first 10 months
plus 19,000 units in last 2 months). We can compute projected income for the
year as follows:
Projected total contribution margin ($22  119,000) ......................... $2,618,000

Projected fixed costs ($200,000  12) ................................................ 2,400,000
Projected income ................................................................................. $ 218,000
The net income projected for the year under variable costing is $218,000.

Another random document with
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Fig. 119.—Gastrotricha. (From Zelinka.) A, Chaetonotus bogdanovii, side view (after
Schimkewitsch); B, Gossea antenniger (after Gosse); C, Dasydetes goniathrix
(after Gosse); D, Dasydetes saltitans (after Stokes); E, D. longisetosum (after
Metschnikoff); F, Chaetonotus spinulosus (after Stokes); G, Chaetonotus
schultzei (after Gosse and Bütschli). (Magnified.) B-F, × about 390; G, × about
125.
We shall follow Zelinka in his description of the common species Chaetonotus

larus as a type. The body is nearly circular in section, flattened a little on the
ventral side. The apertures are the terminal mouth; the anus, nearly terminal and
slightly dorsal; the two kidney openings, ventral, nearly half-way down the trunk;
besides the pore of a cement-gland on either terminal process. The short ventral
and post-anal portion of the trunk with its processes therefore corresponds to the
foot of a Rotifer. The integument of the body is a thin nucleated hypoderm, not
distinctly divided into cells, covered by a chitinised cuticle; it bears cilia, sensory
hairs, and peculiar scale-like processes, sometimes produced into long bristles.
The cilia are chiefly arranged in two ventral bands, each extending nearly the
whole length of the body, and composed of a series of transverse rows of single
cilia; along these bands the hypoderm is thickened and more richly nucleated. The
sides of the head also bear numerous long cilia.
The scales are hollow processes of the cuticle overlapping from before
backwards. A ventral row lies between the ciliary bands; two series of alternating
dorsal rows lie on the back and sides of the animal, and in the hirsute species it is
these that are produced backward into bristles. A single large scale, the "frontal
shield," protects the head above and behind, but does not extend down to the
ventral surface. On either side of the head is a pair of flattened oval areas, the
"lateral fields." From between these on either side springs a tuft of motile sensory
hairs. Two pairs of similar tufts arise dorsally on the front margin of the frontal
shield, and a fourth pair spring from the ventral surface a little behind the mouth.
These hairs are distinguished from ordinary cilia by their length, and their insertion
on large nucleated cells receiving nerves; two pairs of similar hairs lie farther back
on the dorsal surface, one in the front of the neck, one near the base of the pedal
processes.
The muscles lie some in the body-wall, and some traverse the body-cavity; only
six pairs occur, simple, unstriated, and longitudinal. There are neither transverse
nor circular muscles.
The alimentary canal is very simple and nearly straight from mouth to anus; it
may be divided into pharynx, gullet, stomach, and rectum. The mouth is circular,
and looks forwards and a little downwards. From the mouth opens the pharynx, a
short chitinous tube, capable of eversion by being pushed forwards by the gullet; it
bears half-way down a circlet of curved hooks, which open out when it is everted;
within these are tooth-like thickenings.
The oesophagus or gullet is thick and muscular, extending through the whole of
the neck of the animal; its cavity, as well as the opening from the pharynx, is
triradiate like a leech-bite, but can be dilated by the action of the muscular walls,
inserted into a firm external cuticle; the internal wall is also cuticulised, not ciliated
as in Rotifers. The hinder end of the gullet is produced into a short, wide,
membranous funnel projecting freely into the midgut or stomach. The latter is
elongated and oval, composed of four rows of hexagonal cells, with large nuclei.
This is separated by a distinct constriction or sphincter from the short pear-shaped
rectum, which opens by a minute anus on the back just in front of the pedal
processes.
The food is chiefly organic débris; but Gastrotricha have been seen to attack large
Infusoria by nibbling, and to swallow the protoplasm as it exudes from the wound
in their prey.
The nervous system is chiefly composed of the large brain, a ganglion lying like a
saddle above and on the sides of the gullet, and in direct continuity with the nerve-
cells of the cephalic sense-hairs. A pair of dorsal nerve-trunks extend along the
whole length of the gullet. The sense-hairs described with the general integument
may be organs of external taste ("smell") or of touch. Eyes have been described in
several species; and though Zelinka has failed to verify this, I have myself seen a
pair of minute red eyes in the back of the head of an animal (probably a
Chaetonotus), whose hasty escape into a mass of débris prevented my
determining its species.
The kidneys are paired tubes lying at the sides of the front of the stomach, and
sending a simple loop into the neck. Each tube is much convoluted, and ends at
the one extremity in a long "flame-cell," like that of a Rotifer much drawn out, and
at the other by a minute pore on the outer side of the ventral row of scales.
Reproductive Organs.—Only the female is with certainty known to occur; and the
eggs, though recalling in their thick ornamented shell the fertilised winter eggs of
Rotifers, are probably unfertilised and parthenogenetic like the summer eggs. The
ovaries are two minute patches of cells lying at the junction of the stomach and
rectum. The eggs, as they mature and enlarge, press against the side and back of
the stomach, where they attain a length of one-third to one-half that of the mother.
The extrusion of the egg has not been observed; but it is laid in the angles of
weeds, the moulted shells of Entomostraca, etc., where its development may be
studied. The sculpture of the shell serves to anchor it if laid among weeds. When
hatched the head, trunk, and pedal processes are of the full adult size, all
subsequent growth being limited to the neck.
The function of testis has been ascribed by Ludwig to a minute granular organ
between the ovaries above the rectum; if this view be correct the Gastrotricha are
hermaphrodite.
The movements of the Gastrotricha are very elegant, recalling those of the long-
necked Ciliate Infusoria, like Amphileptus, Lacrymaria, etc., with the characteristic
exception that they always swim forwards; the grace of their movements being
due to the bending of the head and neck on the body. Those which are provided
with long motile bristles like Dasydetes, alternate their gliding with leaps, like the
springing Rotifers.
The Gastrotricha are divided into two sub-Orders—Euichthydina, with two pedal
appendages, containing the genera Ichthydium Ehr., Lepidoderma Zel.,
Chaetonotus Ehr., and Chaetura Metsch.; and the Apodina, with no pedal
appendages, comprising Dasydetes G. and Gossea Zel.
Their geographical distribution, like that of most microscopic fresh-water

organisms, is cosmopolitan. Few observers have enumerated the members of this
group; of their extra-temperate occurrence we have only the single observations of
Ehrenberg, Schmarda, and Voeltzkow for Nubia, Ceylon, and Madagascar
respectively.
Of the thirty-two species described, twelve are recorded by A. C. Stokes from

Maine and New Jersey only, besides five others that occur also in Europe. In
Europe nineteen species are recorded, one of which, Ichthydium podura, has also
been found in Nubia and Ceylon. One species, Chaetonotus tabulatus Schmarda,
has been recorded by its author from Colombia (in South America). As of the
nineteen European species only seven have been recorded as British, we may
expect to find that careful study will well repay the student in these islands.
The affinities of this group are probably with the Turbellarians and the
Nematodes; they differ from the former in the highly developed alimentary canal,
and from the latter in the possession of the ciliated ventral bands and wreath. The
general chitinisation of the skin, the primitive body-cavity, the character of the
alimentary canal, the ventral opening of the renal canals far in front of the anus are
characters shared by the Nematodes, many of which possess bristles like this
group. But their affinity must be rather to some hypothetical ancestral group than
to any living Nematodes, which are destitute of cilia. To the Rotifers the affinity,
dwelt on by Zelinka, is less close.
Kinorhyncha.
This Class and Order comprises but one genus, Echinoderes (Fig. 120), founded
in 1851 by Dujardin.[289] Reinhard's monograph[290] is the generally accepted
authority on this subject, and contains a full bibliography, with diagnoses of the
individual species, eighteen in number.
Fig. 120.—Echinoderes dujardinii (?), drawn from a preserved specimen taken at

Worthing. × about 210. b, Bristle; c.s, caudal spine; ph, pharynx; s and s', the
spines on the two segments of the proboscis; s.g, salivary glands; st, stomach.
The animals of this group are found in shallow seas with muddy bottom, below
low-water mark, and feed on organic débris. They have been taken in the Black
Sea, Mediterranean, British Channel, and North Sea, and off the Canary Islands
(Lanzarote, Porto Pi, Palma di Mallorca). Their size varies from 0.86 mm. × 0.22
mm. in Echinoderes spinosus, to 0.14 mm. × 0.03 mm. in E. kowalevskii.[291]
The body is protected by a strong chitinous cuticle distinctly annulated, forming

eleven rings, besides a retractile proboscis obscurely divided into two segments at
the apex of which the mouth opens. The anus opens on the extreme end of the
last segment, which is frequently retracted; the genital pores open right and left of
the anus; and the renal pores lie on either side of the back of the ninth segment.
The first ring may be undivided, or else distinctly divided into four plates, one
dorsal, two latero-ventral, and one ventral. In the remaining segments each ring
has only three plates, one dorsal and two ventral, the two latter being sometimes
more or less fused in the last or ventral segment. These plates all overlap from
before backwards.
As the name Echinoderes implies (Thorn-skin), the cuticle is produced into points,
bristles, or spines. The last segment frequently bears a large pair of these, which
have been compared, on the flimsiest grounds, with the furcal processes of
Crustacea and the perforated toes of Rotifers and Gastrotricha.
The proboscis when extruded has the form of a truncated cone, obscurely divided
into two segments, a ring of strong spines marking the boundary between them,
and a second double ring of spines surrounding the apex. The eversion is of the
type termed by Lankester pleurembolic or acrecbolic, the sides being first
withdrawn, the apex first extruded.
As in so many Invertebrata, the epidermis is not separated by boundaries into

distinct cells. This layer sends out processes each of which lies in a hollow in the
thick cuticle, and perforates it to end in a fine bristle. Minute orange pigment-
granules occur at irregular intervals in this hypoderm.
The muscles of Echinoderes are simple striated bands. Numerous bands lie
within and attached to the body-wall, extending its whole length; paired dorsi-
ventral muscles separate the intestine from the reproductive organ on either side,
and a complex system effect the movements of the proboscis.
Alimentary Canal.—The pore at the tip of the proboscis leads into a short thin-
walled tube, which is rarely evaginated; into the base of this tube projects the short
bluntly conical apex of the large ovoid muscular pharynx (or gullet?); this is lined
by an epithelial layer of nucleated protoplasm, which secretes a strong cuticle. The
stomach is a wide tube, somewhat dilated in each segment between the paired
dorsi-ventral muscles, and tapering behind to end in the terminal anus. Four
minute glands open at the junction of the pharynx and stomach.
Kidneys.—These are a pair of blind pear-shaped sacs, ciliated within (the only
case of ciliation in Echinoderes), lying in the eighth segment, and opening by the
taper ends right and left on the back of the ninth segment.
Nervous System.—All that has been clearly defined of this is a small brain or
ganglion lying dorsally at the junction of the pharynx and stomach. From two to
eight eye-spots have been described by earlier writers, but Reinhard was unable
to find them in the (distinct) species which he principally worked at, though he
noted their existence in the solitary specimen of the original species, E. dujardini,
which he obtained.
Reproductive Organs.—The sexes are distinct. The reproductive glands form a

pair of tubular sacs, opening ventrally on either side of the anus, and extending
forwards beside the gut as far forwards as the fifth to the second segment in the
male, but only to the fourth at furthest in the female. The ova are large nucleated
cells embedded in the protoplasmic lining of the ovarian sac, and acquiring a
distinct shell as they approach its opening. Three-quarters of the testis sac is
occupied with granular protoplasm containing a quantity of small nuclei; the lower
part alone contains mature spermatozoa. Adjoining each external opening in the
male are a pair of short hollowed spines, which may perhaps serve as organs of
copulation; but nothing is really known of this process or of the development of the
egg. It is almost certain, from the absence of developing eggs within Echinoderes,
that the genus is not viviparous.
From the foregoing description it is obvious that Echinoderes approaches the

Nematoda very closely: the two main points of difference are its ciliated kidneys
and its bilaterally paired sexual organs. Possibly the study of such forms as
Desmoscolex (Fig. 81, p. 159) may reveal closer affinities.
[Zelinka (Verh. D. Zool. Ges., 1894 and 1898), has given a preliminary
account of a new research on this group. The principal addition is the
discovery of a ventral nerve-cord, with a ganglionic dilatation in each
segment, lying in the ectoderm of the body-wall, as indeed do the brain and
nerve-collar. He divides the genus into two Orders according as the orifice of
the retracted fore-part of the body is slit-like or circular. The former
(Homalorhagae) retract the first two segments with the proboscis; they are
mud-dwellers, sluggish, eyeless: the latter group (Cyclorhagae) only retract
the first segment with the proboscis; they crawl among algae, and mostly
have paired pigmented eye-spots, each with a lens, imbedded in the brain.—
M. H., Jan. 1901.]
ARCHIANNELIDA, POLYCHAETA, AND MYZOSTOMARIA
BY
W. BLAXLAND BENHAM, D.Sc. (Lond.), Hon. M.A. (Oxon.)
CHAPTER IX
THE CHAETOPODOUS WORMS—THE ARCHIANNELIDA—ANATOMY OF NEREIS, AS

TYPICAL OF THE POLYCHAETA
Those animals which possess lateral bundles of bristles (technically termed

"chaetae") for use in locomotion constitute the group of "Bristle-worms," or
Chaetopoda. The body of these animals is made up of a preoral lobe or
prostomium, and a number of more or less distinct segments following one
another in a line, and repeating one another in their internal and external structure.
The Chaetopoda embrace the following smaller groups or Orders:—I.
Archiannelida, II. Polychaeta, III. Myzostomaria, IV. Oligochaeta. The
Archiannelida, although without the characteristic chaetae, are yet anatomically so
similar to the true Chaetopoda that they must be included in the group, just as
certain fishes are classed as "Vertebrata," although they do not possess
vertebrae. The old term Annelida is sometimes used to include the above-
mentioned groups, together with the Gephyrea[292] and the Hirudinea or leeches.
Order I. Archiannelida.
The Archiannelida are very simple worms, but simplicity may be, and very
frequently is, the result of degeneration; and it is not always possible to determine
whether a simple animal is primitively, i.e. ancestrally simple, or whether it is
secondarily simplified. Hence the term Haplodrili has been employed by Professor
Lankester as the name of the group; a term which does not prejudge the question
as to whether or not the worms are "primitive." It is quite possible, and even
probable, that Dinophilus is ancestrally simple; whilst many features in Polygordius
appear to be the result of simplification. For this reason it would be well to
separate Dinophilus from the other two genera, on account of its much less
elaborate and more generalised structure,—so generalised, in fact, that the worm
is by some authorities placed amongst the Planarians; for the present, however,
the group Archiannelida may be regarded as containing three genera: Dinophilus,
Protodrilus, and Polygordius.[293]
Fig. 121.—Dinophilus taeniatus. (From Harmer.) The left figure represents the dorsal
surface of a young individual, × 76; the mouth and alimentary tract are seen by
transparency: p, prostomium, with two bands of cilia and a pair of eyes; a,
anus; t, tail; 1 to 5, the segments with ciliated bands. The right figure shows the
anatomy of the male, × 38: b, rectum; c, body-cavity; d, vas deferens; m,
muscular organ (pharynx); n', the first nephridium; oe, entrance to oesophagus;
p, penis; st, intestine (stomach); s.x, seminal vesicle (5th nephridium).
Dinophilus is represented on our coasts by at least two species: D. gigas

Weldon[294] and D. taeniatus Harmer.[295] The latter is about one-twelfth of an
inch in length, bright orange in colour, and more or less abundant, at springtime, in
the rock pools around Plymouth, where it may be found amongst green algae, or
on the mud at the bottom of the pools.
The animal consists of a broad prostomium, with a pair of eyes; and of a body,
distinctly constricted in immature specimens into five or six segments, followed by
a short conical tail. There are neither chaetae nor tentacles; locomotion is chiefly
effected by means of the bands of cilia which encircle the body in a regular
fashion, two bands round the head, and two round each segment in D. taeniatus;
in some species there is only a single band on each segment. The whole of the
ventral surface is covered with cilia, by the aid of which the animal probably
"creeps" along the weeds.
The alimentary canal is straight, and divisible into the regions shown in Fig. 121; a
muscular protrusible organ, which is a ventral outgrowth of the foregut, is
employed as a "sucker." The coelom is more or less obliterated (or ill developed).
The excretory system in the genus is varied: in some species, as in D. gigas, it is
stated to be constructed on the Planarian plan; in others, as in D. taeniatus, the
organs are definite nephridia. Of these tubes there are five pairs, the last pair in
the male serving as a seminal vesicle. Each nephridium is a ciliated tube, the
internal end of which lies in the body-cavity and appears to be blocked by a
ciliated tongue-shaped appendage. The first pair corresponds to the "larval
nephridia" of Trochosphere larvae.
The nervous system, which is in contact with the epidermis, consists of a brain in
the prostomium, and, on each side of the body, a ventral cord with five ganglia,
connected by transverse commissures in as many segments.
The sexes are separate, and are usually similar; the male of D. gyrociliatus is,
however, much smaller than the female. The generative organs occupy the greater
part of the body-cavity; in the male the testes communicate, by means of the pair
of seminal vesicles, with a median eversible apparatus. In the female the paired
ovaries communicate with a median sac which serves as a spermatheca.
The development is simple:[296] the worm itself is more like a larval Polychaete
than a full-grown worm. Dinophilus is an extremely interesting form, and it has
been suggested that, while still possessing certain Planarian characteristics, it
may be looked upon as closely resembling the ancestor from which the
Chaetopoda have arisen.
Protodrilus and Polygordius are distinctly Annelidan in character. Protodrilus[297] is

found in the mud of the "Pantano," an inlet of the sea near Messina; whilst of
Polygordius[298] one species at least occurs on our shores, and several others in
the Mediterranean and elsewhere. The worms are cylindrical, with many
segments, but these segments are only indistinctly marked externally—by girdles
of cilia in Protodrilus, or by faint grooves in Polygordius; but there are none of the
characteristic Chaetopod bristles or chaetae. The small prostomium which
overhangs the mouth is provided with a pair of ciliated pits, and carries a pair of
tentacles, serving as sensory organs, which, in Protodrilus, are also respiratory.
The anus is surrounded by glandular papillae in Polygordius, by means of which
the animal can fix itself; these are represented in Protodrilus by a couple of
processes.
The nervous system lies entirely in the epidermis. The body-cavity is regularly
segmented by transverse septa passing from the body-wall to the intestinal wall.
The foregut presents a slight eversible portion in Polygordius, whilst in Protodrilus
it has a peculiar U-shaped muscular diverticulum on its ventral surface,
corresponding with the similar apparatus in Dinophilus; it is capable of eversion,
and aids the worm in burrowing, as well as in seizing and swallowing the mud. The
vascular system is represented by a dorsal and a ventral vessel, neither of which,
however, is contractile. In Protodrilus the dorsal vessel divides into two branches
in the first segment, each of which passes to the tip of the tentacle, and returning,
joins its fellow to form the ventral vessel. In some species of Polygordius there is a
pair of vessels connecting the dorsal and ventral vessels in every segment, but no
vessel to the tentacle. The blood is colourless in some species of Polygordius, but
may be yellow (P. neapolitanus), red (P. lacteus), or green (P. erythrophthalmus).
Paired nephridia, with distinct funnels, occur regularly throughout the body.
The sexes are separate in Polygordius, whilst Protodrilus is hermaphrodite,

bearing ova in the first seven segments and testes in the remaining segments.
The genital cells are produced from the body-wall in every segment; their mode of
discharge is unknown in the male Polygordius, though probably the nephridia
convey the spermatozoa to the exterior; but in the female the body-wall ruptures to
allow the ova to escape, and then the animal dies. The development of
Polygordius has been made the subject of very careful study; the larva has long
been known, and is a typical "trochosphere" of rather a depressed form. This
"trochosphere" larva is of considerable importance, as it makes its appearance in
sundry groups of animals in some form or another. Here, in Polygordius, it has the
appearance of a couple of wide but low cones united together by their bases,
which form the equator of the larva. This equator carries a double girdle of cilia,
dividing the animal into a preoral and postoral region; for the mouth is placed on
one side of the animal between the two girdles, while the anus lies at the apex of
the postoral cone, and is surrounded by another girdle of cilia. The alimentary
canal is divisible into three regions; it is separated from the body-wall by an
extensive space, which contains cells destined to give rise to muscles and
nephridia. A nervous system (apical plate) is present at the apex of the preoral
cone. This little larva swims freely on the surface of the sea, moving, balancing,
and feeding by means of the girdle of cilia. It soon increases in length by the active
growth of the apex of the postoral cone, which becomes cylindrical and then
segmented externally and internally. The greater part of the original larva remains
of the same shape as before, and forms the head (prostomium and peristomium):
small tentacles grow out of the preoral lobe, and after a gradual reduction in the
relative size of the "head" by the growth of the segmented "body," the animal
becomes worm-like and develops into a Polygordius.[299]
Order II. Polychaeta.
Anatomy of Nereis.—In order to obtain a general idea of a Polychaete worm, it is

well to study a concrete example, and for this purpose the common Nereis serves
excellently. Several species (see p. 315) occur more or less commonly on our
coasts, and the general remarks will apply to one as well as to another.
Nereis pelagica Linnaeus reaches a length of 5 to 6 inches, and is about ¼ inch

across. It is convex above, nearly flat below. Its colour is brown or bronze. The
worm, which is to be found in shallow water, is made up of a considerable number
of rings or segments, constituting the "trunk" or "body," terminated at each end by
modified segments known as "head" and "tail" (Fig. 122). The segments
composing the trunk are all alike, except for small proportional differences, and it
will be convenient to describe a "typical segment" before referring to the head or
tail.
A typical body segment carries on each side a muscular lobed outgrowth,

bearing bundles of bristles or "chaetae," and filamentous sensory organs known
as "cirri." To this lateral locomotor organ Huxley gave the name "parapodium" (Fig.
124). Each parapodium or foot consists of a basal portion, supporting a dorsal and
a ventral process, the "notopodium" (ntp) and "neuropodium" (nrp) respectively,
each of which is bilobed. The lobes are very vascular and glandular, and probably
serve as respiratory organs or "gills."
Fig. 122.—Nereis pelagica L., natural size. (From Ehlers.)
Fig. 123.—Chaetae of Nereis; enlarged. A, from neuropodium; B, from notopodium

of N. diversicolor; C, swimming chaeta of Heteronereid stage of N. dumerilii.
The chaetae, or bristles, of each bundle project from the mouth of a great sac, the
lips of which are particularly prominent in Nereis. Each chaeta arises from a single
cell situated at the bottom of the sac. The chaetae of Nereis, as of many other
Polychaetes, are of a kind usually termed compound or "jointed," each being
composed of a long stalk and a small "appendix" articulated in a cup at its
extremity (Fig. 123). The shape of the cup varies; it is in some cases of equal
height all round, or it is higher on one side than on the other. Further, the appendix
may be short and curved, or more elongate and spear-like; it is generally notched
or finely toothed on one side.
Fig. 124.—Nereis. Somewhat diagrammatic transverse section through the body. On

the left the chief constituents of the vascular system are represented; on the
right side the chaetae and their muscles, as well as the distribution of the
lateral nerve, etc., are shown. ac, aciculum; bv, network of blood-vessels; ch,
chaetae (only a few are shown) in two bundles; ch.l, lips of the chaetigerous
sac; cil.org, dorsal ciliated organ; cir, circular muscular coat; coe, coelom; d.cir,
dorsal cirrus; d.long, dorsal bundle of longitudinal muscles; d.ve, dorsal blood
trunk; ep, epidermis; INT, intestine; int.cap, blood capillaries in its wall; m.ch,
muscles which move the chaetae; N.c, ventral nerve cord; ner, lateral sensory
nerve, dividing into a ventral branch entering the ventral cirrus, and a dorsal
branch (n.cir) for the dorsal cirrus; neph, nephridium, seen through the oblique
muscle through which its funnel passes; nrp, neuropodium; nrp.lig, neuropodial
lobe or ligule; ntp, notopodium; ntp.lig, notopodial ligule; obl, oblique transverse
muscle (muscle of the parapodium); pv, peripheral blood-vessel; v.cir, ventral
cirrus; v.long, ventral bundle of longitudinal muscles; v.ve, ventral blood trunk.
In addition to these projecting locomotor chaetae, there is embedded in each of

the two chaetigerous lobes a much stouter and dark-coloured, needle-shaped
bristle known as an "aciculum," whose point only just projects beyond the surface.
This aciculum extends into the interior of the body much farther than do the
locomotor chaetae, and it is to it that the muscles serving to move the whole
bundle of chaetae are attached. The acicula thus serve as an internal skeleton to
the parapodium. The shape of the parapodium, the relative lengths of cirri and
lobes, the shape and arrangement of the chaetae, are all employed as specific
characters.
The head consists of a preoral portion above the mouth, the "prostomium," and a
postoral region surrounding the mouth, the "peristomium" (Fig. 125). The
prostomium varies in shape in different species of Nereis; but it always carries on
its dorsal surface two pairs of eyes. From its narrower anterior end there arises a
pair of short, somewhat conical, sensory processes known as the "prostomial
tentacles." A second pair of processes springs from the under surface, and rather
to the side of the prostomium; these are known as the "palps," and in Nereis are
much more conspicuous than the tentacles; each is composed of two parts, a
large basal piece and a smaller terminal joint, capable of being withdrawn into the
former. The palps are highly muscular, and though they are sensory organs, act
also as great lateral lips.
Fig. 125.—Nereis diversicolor Müll. × 4. Head, with buccal region everted. A, Dorsal
view; B, ventral view. a, Prostomium; B, everted buccal region; c, c',
peristomial cirri, 1, 2, 3, 4; d, denticles or paragnaths; e, eyes; E, lower lip; P,
palp in A, entrance to pharynx in B; J, jaw; T, tentacle; I, peristomium; II, foot of
apparent second segment.
The peristomium is in many species of Nereis (as in N. pelagica) considerably

larger than the trunk segments; it carries at its anterior edge four filiform cirri on
each side, which are directed forwards and used as feelers. They are arranged in
couples; a more anterior couple of dorsal and ventral cirri, and a more posterior
couple of dorsal and ventral cirri.
The Tail.—As the most anterior segment is perforated by the mouth, and is
modified as described above, so the last or anal segment, which carries the anus,
differs from the rest. It is more or less elongated, cylindrical, and without parapodia
or chaetae. It retains, however, its pair of ventral cirri, which are very long.
Internal Anatomy.—In correspondence with the external metamerism there is an

internal repetition of parts. For, except in the anterior segments, where the
powerful protrusible pharynx is situated, the body-cavity or "coelom" is divided into
a series of chambers, by means of muscular septa inserted, on the one hand, into
the body-wall at the level of the grooves between the external segments, and, on
the other, into the wall of the alimentary canal. Each of these coelomic chambers
contains a pair of nephridia, a portion of the intestine, of the vascular system, and
of the nervous system, as will be seen in Fig. 124.
The epidermis, which forms the outer part of the body-wall, consists of a single
layer of cells, covered externally by a thin, tough cuticle. The latter is usually
stated to consist of the chemical substance known as chitin, but since the cuticle
differs from true chitin by dissolving in caustic potash after a time, Eisig[300] has
suggested that its substance is merely a stage in the formation of chitin. The
epidermis contains gland-cells, which are especially abundant on the lobes of the
parapodia. Below the epidermis lies the circular coat of muscles by whose
contraction the worm diminishes its diameter: it is interrupted on each side at the
junction of the parapodium with the body. Deeper still lie the longitudinal muscles,
which form four great bundles, two dorsal, separated by the insertion of a small
mesentery and dorsal blood-vessel, and two ventral bundles separated in the
middle line by the nerve-cords. These longitudinal muscles, by their contraction,
bend the worm from side to side, and are continuous from segment to segment. A
very characteristic muscle, present in all the Polychaeta, is an obliquely transverse
sheet of fibres passing from the body-wall at the side of the nerve-cord to the
parapodium, where it spreads out and serves to move the parapodium (Fig. 124).
All these muscles consist of smooth fibres, as in the earthworm.
The alimentary canal may be divided into the following four regions:—(1) buccal
or eversible region, (2) pharynx, carrying the great jaws, (3) oesophagus, (4)
intestine.
The first two regions constitute an "introvert" (Lankester[301]). When fully everted
the whole of the buccal region is turned inside out, and the terminal aperture leads
directly into the pharynx, which is not everted but merely protruded. Throughout
the following chapters the word "buccal" region is used for that part—if any—which
is thus everted (Figs. 125, 126).
Both the buccal and pharyngeal regions are wrapped round by several coats of
muscle, to form apparently a single muscular organ (Fig. 127, sh), which occupies
about eight segments in a condition of complete introversion. The septa are
absent from the anterior part of the body.
Fig. 126.—Diagrams to illustrate the action of the Chaetopodan "introvert." (From

Lang.) A shows the apparatus at rest; the mouth leads into the buccal cavity
(B), with paragnaths in its wall; P, the pharynx, with jaws at its anterior end; c,
brain; p, protractor muscles; r, retractors. B, the pharynx has been brought
forward or protruded by the eversion, or turning inside out, of the buccal region,
so that the jaws (j) now lie some way in front of the head, which is represented
by the brain.
The buccal region is lined with chitin, which is specially thickened at certain
definite spots, forming small "denticles" or "paragnaths" (Fig. 125), which have a
different arrangement in the various species.
The cavity of the pharynx is narrow and the walls thick and muscular; each side
wall carries a large, dark, chitinous "jaw" (Fig. 127, J), which is hollow at the base,
into which the muscles serving to move it are inserted, whilst the apex is solid,
curved, and more or less notched. These two great jaws are used not only for
tearing prey, but for seizing it; for when the pharynx is entirely protruded the two
jaws are wide apart, and when retraction takes place they come together and
grasp the prey.
Eversion of the apparatus is partly effected by protractor muscles (Fig. 126, A, p)

and partly by the pressure of the coelomic fluid, compressed by the muscles of the
body-wall; the eversion is stopped at a certain stage by a sheet of muscular tissue
or "diaphragm" (Fig. 127, diaph) inserted round the buccal region and attached to
the body-wall in the second segment. The introversion is effected partly by the
contraction of this diaphragm and partly by the action of powerful retractor
muscles (Fig. 126, r) inserted into the hinder end of the pharynx and passing to
the body-wall (these are removed in Fig. 127). The movement of the jaws
themselves and of the wall of the apparatus is due to other muscles.
The oesophagus is quite short; into it opens a pair of sacculated diverticula or

glands. Then follows the intestine, which extends through the rest of the body as a
thin-walled tube, slightly dilated at the insertion of the septa.
Fig. 127.—Nereis, laid open by removal of the dorsal body-wall. br, Cerebral
ganglion, from which three pairs of nerves are represented as arising; a pair to
the tentacles, a pair to the palps, and a pair (con) passing one on each side of
the buccal region, to join the ventral nerve-cord; mo, mouth, exposed by
removal of the dorsal wall of the buccal region (Buc); pgn, the paragnaths in its
wall; Ph, pharynx; J, the large "jaws" embedded in its wall; J.mus, the muscles
which work the jaws; sh, the muscular sheath; diaph, the "diaphragm"; oes,
oesophagus; gl, its glands; st, stomach; int, intestine; Sept, septum; d.v, dorsal
blood trunk; p.v, perivisceral branches, one pair in each segment; P, palp; t,
tentacle; per, peristomium; per.ci, two of the four peristomial cirri; ppIII, the first
parapodium which belongs to the third true, but second apparent, segment;
cir.m, circular muscular coat; lg.m, longitudinal muscular coat of the body-wall.
The vascular system consists of a contractile dorsal vessel and of a non-

contractile ventral vessel extending along the whole length of the body, from each
of which paired and segmentally-arranged vessels pass to the intestinal wall and
to the body-wall, and here form extensive capillary networks (Fig. 124, p. 247).
This type of vascular system is pretty generally adhered to throughout the Order,
but in the Terebelliformia, Scoleciformia, and Cryptocephala the dorsal vessel and
capillary plexus on the intestine are replaced by a continuous blood sinus, situated
in the substance of the gut-wall. This "perienteric sinus" has the same relation to
the segmental vessels as the dorsal vessel has in the Nereidiformia, and from it a
tubular dorsal vessel arises anteriorly. In Arenicola the sinus is preceded in the
young stage by a network the branches of which gradually enlarge, meet, and fuse
to form the sinus.[302] Whether it is in all cases secondary is a moot point.
This system of vessels in the majority of Chaetopoda contains a respiratory fluid

coloured red[303] by haemoglobin in solution; in it float a very few small oval
nucleated non-amoeboid corpuscles. But the place of this red pigment is taken by
a green one, named "chlorocruorin," in the Chlorhaemidae and many
Sabelliformia;[304] whilst in Magelona[305] the blood is tinted madder-pink by a
number of globules of "haemerythrin." The blood (or "haemal fluid") is driven
forwards in the dorsal vessel, and passes backwards in the ventral vessel.
Respiration in Nereis is carried on by the whole surface of the body, but naturally
with greater activity in the surface of the parapodia, the lobes of which, with their
extensive vascular plexus, may be termed "gills"; but it must be borne in mind that
these organs have other functions as well.
The coelomic fluid, which fills the general body-cavity, is colourless, and contains
amoeboid corpuscles or "leucocytes." It corresponds to the lymph of Vertebrates,
being nutritive in function, in that it conveys absorbed material from the wall of the
intestine to the organs of the body, and at the same time removes any waste
substances from these organs; these waste substances contain nitrogen, and are
ultimately removed by the nephridia. In Ophelia many of the corpuscles contain a
curious dumb-bell-shaped rod of chitin, and it has been shown[306] that this
substance is a highly complex form of excretory material,—more complex than
guanin, for instance, which exists in the corpuscles of the Capitelliformia.
In Glyceridae, Capitelliformia, and Polycirrus haematodes (a Terebellid), the

vascular system is absent, and the coelomic corpuscles become coloured by
haemoglobin, and in order that the coelomic fluid may be distributed to the organs
of the body, the peritoneum is ciliated along certain definite tracts. The fluid in
these "anangian" worms thus combines originally separate functions, and behaves
like the "blood" of Vertebrates.
The excretory system is represented by a pair of nephridia in each segment, with

the exception of a few anteriorly and a few posteriorly. The nephridium of Nereis
differs from that of most other Polychaetes hitherto examined carefully, and rather
resembles that of the Oligochaetous Enchytraeids. It consists of a compact gland-
like organ, containing a much coiled tube, ciliated for the greater part of its length,
but deprived of cilia in its last coils; this latter part—or duct—leaves the "gland"
and pierces the body-wall, opening to the exterior at the base of the parapodium.
The ciliated canal passes forwards into the next segment, where it opens by a
funnel into the coelom. The lip of the funnel is extremely curious, for the cells
constituting it are drawn out into very long, delicate processes covered with cilia.
[307]
Fig. 128.—Nephridium of Nereis. (From Goodrich.) f, Funnel; n, neck, which passes

through a septum; t, coiled tubule; c, connective tissue; d, duct.
In most Polychaetes the nephridium is a wide, sac-like tube as in Arenicola[308]

(Fig. 129). Its walls are covered by a dense network of blood-vessels, and it not
only acts as an excretory organ, but also as a genital duct (see p. 273).
Excretion, in the strict sense of the word, is carried out by the cells forming the
wall of the tube; they remove waste materials from the blood distributed over the
surface of the organ. But, in addition, there is a removal from the coelom, by
means of the funnel, of any dead or dying coelomic corpuscles which in their turn
have eaten up or otherwise destroyed foreign bodies (such as Bacteria, etc.) that
may have entered the animal.
In Nereis there is in each segment, in addition to the pair of nephridia, a pair of

"dorsal ciliated organs" (Goodrich) (cil.org in Fig. 124). Each appears as a wide-
mouthed funnel, greatly folded, and without any permanent outlet. But it is
possible that these organs function as genital ducts, and that the external aperture
will make its appearance temporarily at the period of maturity. This "dorsal ciliated
organ" has not been met with in allied genera—such as Eunice, Nephthys,
Polynoë, Glycera—where the nephridium is a wide tube, and serves as a genital
duct.
Fig. 129.—Nephridium of Arenicola. (From Benham.) × 4. d, Dorsal lip of funnel; v,

ventral lip of funnel; b, blood-vessel (all the black lines are blood-vessels); m,
dilated bladder; x, part cut away from body-wall where the nephridium is
passing to the exterior.
The nervous system, as in all Chaetopods, consists of a dorsal cerebral ganglion

or "brain" (Fig. 127, br), connected by circum-buccal commissures with the
anterior end of a ventral chain of ganglia. The brain occupies the prostomium,[309]
and from it nerves pass away to the prostomial tentacles and palps. The circum-
buccal commissures spring from the outer corner of the brain, and from each
arises a nerve to the first pair of peristomial cirri. The first ventral ganglion lies in
the third segment, and represents at least two ganglion-pairs fused together, for
from it arise (1) a pair of nerves to the second pair of peristomial cirri and (2) a pair
to the first parapodium. In the remainder of the body there is a ganglion in each
segment, whence nerves pass outwards to the parapodium and muscles of the
segment (Fig. 124).
In Nereis the apparently single ganglion in each segment really consists of two
halves, and the apparently single cord which traverses the whole length of the
body consists of two closely apposed cords. In some worms, such as Serpulidae,
the two cords are more or less widely separated, and the two ganglia of each
segment are thus distinct, and connected by a transverse commissure. In Nereis,
as well as in many other Polychaeta, the nerve-cords lie within the body-wall, but
in other cases they lie in the epidermis, as they do in Archiannelida.
The visceral nervous system, supplying the muscles of the pharynx, is frequently
highly developed. In Nereis it arises on each side by two roots, one from the brain,
the second from the circum-buccal commissure.
Fig. 130.—Eye of Nereis. (After Andrews.) × 150. A, Section through the entire eye;
c, cuticle; e, epidermis; l, lens; h, rods; r, retina; n, optic nerve: B, isolated
retinal element; c, cell; p, pigment; h, rod: f, nerve-fibre.
The organs of sense in Nereis are eyes, tentacles, palps, and cirri. The four
eyes, which rest upon the brain, have the structure represented in Fig. 130. The
retina consists of a single layer of cells containing pigment; each cell is drawn out
peripherally into a nerve-fibre, whilst centrally it forms a cuticular product—the
"rod" (h). The edges of the retina are continuous with the surrounding epidermis,
and the cup thus formed remains widely opened to the cuticle in a few
Polychaetes, e.g. Autolytus, and in the young of Nereis, but more usually it has the
relations represented in the figure. The lens is produced by the retinal cells
(according to Andrews[310]), and is in some cases (Eunice, Amphinome)
continuous with the cuticle. It appears to be composed in other cases
(Lepidonotus) of continuations of the retinal rods. The structure of the other sense
organs indicates their adaptation to a tactile function; in each case a nerve
traverses the axis of the organ, and the nerve-fibrils terminate in sensory cells.
Very probably the palps have a certain power of testing the food—a combination
of the senses of taste and smell.
The Generative System.—In all the Polychaeta, with very few exceptions, the
sexes are separate; and the reproductive cells—ova and spermatozoa—are
produced at certain seasons of the year by the rapid proliferation and modification
of coelomic epithelial cells surrounding the blood-vessels in the parapodium and
its immediate neighbourhood. The sexual cells remain in the coelom till they are
ripe.
The egg-cells become filled with yolk globules; a vitelline membrane is present,
and an outer coat of albuminous material. It is doubtful by what means these
sexual cells are discharged in Nereis. There is some evidence that the "dorsal
ciliated organ" may act as a genital duct. In some other worms the nephridia serve
this purpose, whilst in others a rupture of the body-wall allows the products to
escape into the sea. According to Wistinghausen,[311] at the time of discharge the
females of Nereis dumerilii become surrounded by a kind of gelatinous tube
formed from a secretion of the parapodial glands, and into this tube the ova are
discharged, and arranged in a single layer round its wall.
The common species Nereis diversicolor is viviparous. In a large number of
species of Nereis the sexually-mature individuals undergo very marked changes in
various parts of their body, so that they differ very greatly from the immature
individuals.
These changes resulting in the "heteronereid" condition will be dealt with at some
length in Chap. X. p. 276. The larvae of Polychaetes and other facts connected
with reproduction are described in the same chapter.
CHAPTER X
CLASSIFICATION OF THE POLYCHAETA—SHAPE—HEAD—PARAPODIA—CHAETAE—GILLS

—INTERNAL ORGANS—JAWS—SENSE ORGANS—REPRODUCTION—LARVAL FORMS—
BUDDING—FISSION—BRANCHING—REGENERATION.
The Polychaeta are marine worms whose bodies are usually elongated and
cylindrical; they either lead a free life, swimming in the open sea, or crawling along
the bottom; or they pass their life in burrows or definite tubes of various kinds.
Each segment is normally provided on each side with a single or a couple of

bundles of chaetae, by means of which locomotion is effected. These, in the free-
living forms, are carried at the ends of lateral muscular outgrowths of the body,
known as "parapodia," which are practically limbs.
The "head" of the worm generally carries eyes, and frequently more or less
elongated tactile organs, the "tentacles" dorsally and "palps" ventrally. The foregut
is frequently provided with a masticating apparatus in its anterior region, which is
capable of protrusion; but this apparatus is absent in many burrowing and
tubicolous forms. The sexes are separate, so that there is no such complicated
system of generative organs as occurs in the Oligochaeta. The nephridia usually
act as genital ducts. In the majority of cases the egg develops into a larva, the
"Trochosphere," which leads a free life and undergoes a greater or less
metamorphosis into the adult condition.
The classification of Polychaeta adopted in this work is as follows:[312]—
Branch A. Phanerocephala.
Sub-Order 1. Nereidiformia [= Errantia, auctt. + Ariciidae].

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Hilton Solutions Manual

ANSWERS TO REVIEW QUESTIONS

b. In the equation approach, the following profit equation is used:

 unit sales volume  unit variable sales volume fixed

This equation is solved for the sales volume in units.

© 2013 McGraw-Hill Ryerson

7-22 Variable costing is consistent with cost-volume-profit analysis because it properly

© 2013 McGraw-Hill Ryerson

7-29 Activity-based costing (ABC) results in a richer description of an organization's cost

© 2013 McGraw-Hill Ryerson

Explanatory notes for selected items:

aBreak-even sales revenue............................................................................... $40,000

Therefore, variable expenses are 25 percent of sales revenue.

When variable expenses amount to $40,000, sales revenue is $160,000.

c$45,000 = $30,000  (2/3), where 2/3 is the contribution-margin ratio.

d$62,500 = $50,000/.80, where .80 is the contribution-margin ratio.

EXERCISE 7-31 (20 MINUTES)

unit contribution margin

EXERCISE 7-31 (CONTINUED)

Sales revenue - Variable expenses -Fixed expenses = Profit

$10X – $5X – $40,000= $65,000

EXERCISE 7-32 (25 MINUTES)

p denotes Argentina’s peso

3. Sales revenue (5,000  3,000p) ................................................. 15,000,000p

© 2013 McGraw-Hill Ryerson

EXERCISE 7-32 (CONTINUED)

5. Analysis of price change decision:

© 2013 McGraw-Hill Ryerson

EXERCISE 7-33 (25 MINUTES)

Dollars per year

Break-even point: Total expenses

© 2013 McGraw-Hill Ryerson

EXERCISE 7-33 (CONTINUED)

2. Stadium capacity ................................................ 10,000

Break -even point (tickets) 20,000

© 2013 McGraw-Hill Ryerson

EXERCISE 7-34 (25 MINUTES)

Dollars per year

© 2013 McGraw-Hill Ryerson

EXERCISE 7-34 (CONTINUED)

Budgeted sales revenue

(12)(10,000)(.50)P – (12)(10,000)(.50)($1) – $180,000 = 0

© 2013 McGraw-Hill Ryerson

EXERCISE 7-35 (30 MINUTES)

High-quality bicycles ........................................................................................ 25%

5. Target net income:

© 2013 McGraw-Hill Ryerson

EXERCISE 7-36 (15 MINUTES)

1. a. Inventory increases by 2,000 units, so income is greater under absorption

b. Fixed overhead $792 ,000

2. a. Inventory decreases by 5,000 units, so income is greater under variable costing.

b. Fixed overhead $792 ,000

3. a. Inventory remains unchanged, so there is no difference in reported income under

© 2013 McGraw-Hill Ryerson

EXERCISE 7-37 (10 minutes)

Inventoriable costs under variable costing:

Direct material used ............................................................................... $290,000

2. Inventoriable costs under absorption costing:

Direct material used ............................................................................... $290,000

3. Inventoriable costs under throughput costing:

Direct material used* ............................................................................. $290,000